India against yuan bill for Russian oil

India is rejecting pressure from Russian oil suppliers to pay for crude imports in the Chinese currency as tensions between New Delhi and Beijing continue to simmer.
Russia has accumulated billions of dollars worth of rupee assets given its wide trade surplus with India, but it’s struggling to use the funds. At the same time, Russia’s demand for yuan has grown sharply in the past year as its economy becomes more reliant on China for imports. Russian businesses have been settling more of their trade in yuan, with the Chinese currency replacing the dollar as the most traded currency in Russia this year.
Indian refiners mostly pay for Russian oil imports in dirhams, dollars, and a small amount of rupees – if oil prices are above the $60-a-barrel cap imposed by the US and its allies on Russian oil. While the yuan is sometimes used in smaller transactions, Russian oil suppliers are requesting that the Chinese currency be the main unit of transaction for oil trade, a senior government official said.

India’s resistance to transacting in yuan underscores its difficulty in balancing relations between Russia – an important economic ally – and China, a geopolitical rival. At the same time, relations between India and China have remained strained on the back of continuing border disputes.
The government won’t agree to those requests, according to the two people and two other government officials. Almost 70% of India’s refiners are government-owned, which means they would need to follow orders on payment instructions from the finance ministry.
Spokespeople at RBI, the finance ministry and the petroleum & natural gas ministry didn’t immediately respond to emails. Indian Oil, Bharat Petroleum and Hindustan Petroleum also didn’t respond.